Perilous Reversal Stock: Biocryst Pharmaceuticals (BCRX)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Biocryst Pharmaceuticals ( BCRX) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Biocryst Pharmaceuticals as such a stock due to the following factors:

BCRX has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $14.2 million.

BioCryst Pharmaceuticals, Inc., a biotechnology company, designs, optimizes, and develops novel drugs that block key enzymes involved in the pathogenesis of diseases. Currently there are 6 analysts that rate Biocryst Pharmaceuticals a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Biocryst Pharmaceuticals has been 1.2 million shares per day over the past 30 days. Biocryst has a market cap of $713.2 million and is part of the health care sector and drugs industry. The stock has a beta of 3.22 and a short float of 11.9% with 4.61 days to cover. Shares are up 52.8% year-to-date as of the close of trading on Monday.

TheStreet Quant Ratings rates Biocryst Pharmaceuticals as a sell. The company's weaknesses can be seen in multiple areas, such as its disappointing return on equity and generally high debt management risk.

Highlights from the ratings report include:

Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Biotechnology industry and the overall market, BIOCRYST PHARMACEUTICALS INC's return on equity significantly trails that of both the industry average and the S&P 500.

The debt-to-equity ratio is very high at 8.80 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 3.42, which shows the ability to cover short-term cash needs.

BCRX, with its very weak revenue results, has greatly underperformed against the industry average of 15.7%. Since the same quarter one year prior, revenues plummeted by 58.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

Net operating cash flow has increased to -$7.92 million or 32.73% when compared to the same quarter last year. Despite an increase in cash flow, BIOCRYST PHARMACEUTICALS INC's average is still marginally south of the industry average growth rate of 42.25%.

This stock has increased by 742.75% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in BCRX do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.